EUR/USD – Time for a Breakout

EUR/USD – Time for a Breakout

Chart Of The Day

EUR/USD – Time for a Breakout

Between Fed Chair Janet Yellen’s testimony on Capitol Hill, ECB President Mario Draghi’s testimony on monetary policy and the Eurogroup’s decision on Greece’s reform plan, tomorrow will be a big day for the EUR/USD. From both a technical and fundamental perspective the currency pair has been itching for a breakout and waiting for a catalyst to set it on a new direction. We know that the EUR/USD is deeply oversold and short positions are stretched but with the ECB increasing stimulus and the Fed looking to raise interest rates, there is a reason why the EUR/USD is trading at its current levels. How the EUR/USD trades on Tuesday and the days ahead will be determined by whether the gap between Eurozone and U.S. policy widens or narrows. If Yellen talks about tightening and Draghi emphasizes the need for easy monetary policy, the currency pair will break to the downside but if Yellen sounds less eager to raise rates and Draghi seems more comfortable with regional risks now that Greece has received an extension, a short squeeze could finally drive EUR/USD higher.

Taking look at the daily chart, the consolidative triangle pattern is clear. If the EUR/USD breaks the top of the triangle, the next stop should be 1.1645, a former support turned resistance level. If it breaks the downside and takes out 1.1275, the next area of support is at the 11 year low of 1.11.

BK USD/JPY Big Trade +42

Swing

BK Big Trades -- Out of USD/JPY for +42 on trade

BK USD/JPY Big Trade -- Close 1/2 at 119.27, for +42, move stop on rest to Breakeven which is 118.85

FYI BK USD/JPY Big Trade Update -- Second Entry Triggered previously as well for Average Entry of 118.85

BK USD/JPY Big Trade -- First Buy at 119.25 TRIGGERED

BK USD/JPY Big Trade Alert -- Time to Buy USD/JPY Again

As we anticipated, weaker US retail sales has driven the dollar lower against the yen and this move brings USD/JPY into the “value zone.” We are still long term bullish dollars and believe it is time to reestablish our position near current levels. As such place the following orders:

Place order to Buy 1 Lot USD/JPY at 119.25

Place order to Buy 1 Lot USD/JPY at 118.45

Stop 117.70

BK USD/JPY Big Trade +80

Swing

***BK USD/JPY Big Trade Order Adjustments

Place order to Buy 1 Lot USD/JPY at 118.58

Buy 1 more lot at 117.75

Stop 116.80

***BK USD/JPY Big Trade Closed for +80

BK USD/JPY Big Trade Update, Move Stop to 118.70 to lock in +80 pips. Will reload lower if we get stopped out.

BK USD/JPY Big Trade Update -- Move Stop to 118.30 to lock in +40

BK USD/JPY Big Trade Alert -- Time to Buy Again

We are reloading these orders --

The Trade:

USD/JPY Place Order to Buy 1 lot USD/JPY at 117.90

Place Order to Buy 1 Additional lot at 116.75

Stop for ALL 115.35

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—--

It is time to Buy USD/JPY.

Negative interest rates in Switzerland and Quantitative Easing by the European Central Bank leaves the market looking for alternative safe havens. The Yen is attractive but from a fundamental perspective not nearly as alluring as the dollar because U.S. economy is actually improving while Japanese growth is struggling. The Fed is one of a select few central banks looking to raise interest rates this year with the chorus growing. Regardless of whether they choose to do so in the summer or fall doesn’t matter -- the key is that they plan to do so period and that along with the loss of the Franc as a safe haven should make the dollar more attractive. In the long run, we are still looking for USD/JPY to revisit its 121.85 December high.

USD/JPY

Place Order to Buy 1 lot USD/JPY at 117.90

Place Order to Buy 1 Additional lot at 116.75

Stop for ALL 115.35

BK Big Trade Out of USD/JPY for +45. Will look to renter at lower level

Swing

BK Big Trade Out of USD/JPY for +45. Will look to renter at lower level

BK USD/JPY Big Trade -- Move stop to 118.35 to lock in +45

BK USD/JPY Big Trade -- Move Stop up to 118.00

BK USD/JPY Big Trade Alert – Time to Buy

The Trade:

USD/JPY

Buy 1 lot USD/JPY at market (now 117.90)

Place Order to Buy 1 Additional lot at 116.75

Stop for ALL 115.35

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—--

It is time to Buy USD/JPY.

Negative interest rates in Switzerland and the prospect of Quantitative Easing by the European Central Bank leaves the market looking for alternative safe havens. The Yen is attractive but from a fundamental perspective not nearly as alluring as the dollar because U.S. economy is actually improving while Japanese growth is struggling. The Fed is one of a select few central banks looking to raise interest rates this year with the chorus growing. Regardless of whether they choose to do so in the summer or fall doesn’t matter – the key is that they plan to do so period and that along with the loss of the Franc as a safe haven should make the dollar more attractive. In the long run, we are still looking for USD/JPY to revisit its 121.85 December high.

The Trade

USD/JPY

Buy 1 lot USD/JPY at market (now 117.90)

Place Order to Buy 1 Additional lot at 116.75

Stop for ALL 115.35

BK USD/JPY Big Trade Alert +90

Swing

BK USD/JPY Big Trade -- Close at market ahead of weekend 117.34 for +90. Will revisit at lower price

BK USD/JPY Big Trade Alert – Time to Buy

The Trade:

USD/JPY

Place Order Buy 1 lot at 116.44

Place Order to Buy 1 additional lot at 115.85

Stop for ALL at 114.70

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.

—--

It is time to Buy USD/JPY. For the past few days we have been looking for the currency pair to break below 117 and having done so 2 days in a row it is getting cheap.

Despite yesterday’s big drop in retail sales, the tone of the Beige Book tells us that the Federal Reserve is optimistic and on track to raise interest rates this year. Of course, we can’t ignore the fact that DELEVERAGING is driving USD/JPY lower today so we need to layout two separate orders in case it continues. First investors (including major banks and hedge funds) lost their shirts being long oil and now being long EUR/CHF. Nearly EVERYONE (including ourselves) believed that the Swiss National Bank would maintain the 1.20 EUR/CHF peg and their decision to abandon it this morning flushed many traders out (we’re hoping they used stops like we did!).

As a result the Yen rallied across the board as investors unwound their short Yen trades to cover losses. Could there be more deleveraging? Possibly but 116.30 remains an important support level for the currency pair that has held so far. Negative interest rates in Switzerland and the prospect of Quantitative Easing by the European Central Bank leaves the market looking for alternative safe havens. The Yen is attractive but from a fundamental perspective not nearly as alluring as the dollar because U.S. economy is actually improving while Japanese growth is struggling. The Fed is one of a select few central banks looking to raise interest rates this year. Regardless of whether they choose to do so in the summer or fall doesn’t matter – the key is that they plan to do so period and that along with the loss of the Franc as a safe haven should make the dollar more attractive. In the long run, we are still looking for USD/JPY to revisit its 121.85 December high.

Finding the Right Price

Now the trick is to find the right price to buy USD/JPY. The current price of 116.80 is not a value because USD/JPY could trickle lower as more margin calls prompt liquidation or profit taking on other positions. We recommend placing an order to buy 1 lot at 116.40 and 1 lot at 115.85 with a stop on both positions at 114.70.

BK CAD/JPY Big Trade Alert – Stopped Out

Swing

Stopped out on CAD/JPY by 1 pip

BK CAD/JPY Big Trade Alert – Time to Sell the Yen

The Trade:

CAD/JPY

Place Order Buy USD/CAD at market (now 98.40)

Stop 96.77

Risk on our BIG TRADES is large, so make sure your position is small.

We will manage the take profit dynamically and send out alerts on when to take profit and/or move your stop.


—--

It is time to Sell the Yen. For the past few days we have been looking for USD/JPY to break below 117 and having done so 2 days in a row it is getting cheap.

Despite yesterday’s big drop in retail sales, the tone of the Beige Book tells us that the Federal Reserve is optimistic and on track to raise interest rates this year. Of course, we can’t ignore the risk of DELEVERAGING driving the Yen higher. First investors (including major banks and hedge funds) lost their shirts being long oil and now being long EUR/CHF. Nearly EVERYONE (including ourselves) believed that the Swiss National Bank would maintain the 1.20 EUR/CHF peg and their decision to abandon it this morning flushed many traders out (we’re hoping they used stops like we did!).

As a result the Yen rallied against the dollar as investors unwound their short Yen trades to cover losses. There could be more deleveraging but negative interest rates in Switzerland and the prospect of Quantitative Easing by the European Central Bank leaves the market looking for alternative safe havens. The Yen is attractive but from a fundamental perspective not nearly as alluring as the dollar because U.S. economy is actually improving while Japanese growth is struggling. The Fed is one of a select few central banks looking to raise interest rates this year. Regardless of whether they choose to do so in the summer or fall doesn’t matter – the key is that they plan to do so period and that along with the loss of the Franc as a safe haven should make the dollar more attractive. Selling the yen is all about buying dollars and in the long run, we are still looking for USD/JPY to revisit its 121.85 December high. However USD/JPY is not our favorite pick right now because of potential deleveraging and because it is not at an attractive price point. We rather buy USD/JPY closer to the 115.85-116.30 range.

Selling the Yen vs. the CAD

What we like right now is buying the Canadian dollar on the other hand is looking very attractive. We closed our short USD/CAD trade this morning amidst the mayhem in fear of the relief rally, which has ensued but with oil prices up over $5 in the past 48 hours, we expect a further bounce in the loonie. It is no coincidence that the 16-year trendline that marked a bottom in oil in 2009 is holding.

The Trade

CAD/JPY

Place Order Buy USD/CAD at market (now 98.40)

Stop 96.77

EUR/CHF – Good Time to Buy?

EUR/CHF – Good Time to Buy?

Chart Of The Day

EUR/CHF – Good Time to Buy?


Fundamentals

After sitting on their hands for the past 2 months watching EUR/CHF test their floor of 1.20, the Swiss National Bank finally took action this morning by adopting a negative interest rate. Their announcement sent EUR/CHF to a high of 1.2097 but as we have seen in today’s price action fighting the market can be difficult. The rally fizzled by the end of the North American session with the currency pair trading back within its month long range. Strong fundamental factors have driven investors into the Swiss Franc including euro weakness (driven by ECB policy), Russian inflows (from the currency crisis) and a general demand for safe haven assets. Unfortunately for the SNB, the problems that have caused pressure on EUR/CHF are not expected to improve anytime soon. However central banks have deep pockets and the SNB understands the consequences of letting the EUR/CHF peg break. The whole credibility of their currency and monetary policy would come into question if they allowed EUR/CHF to drop below 1.20 by more than a few pips so a lot is at stake. We believe that the SNB will overtly intervene in EUR/CHF if the rate cut does not work which is why we feel it is a good time to buy EUR/CHF between 1.2020 and 1.2040 for a move back towards 1.21.

Technicals

When it comes to EUR/CHF, the 1.20 peg distorts the effectiveness of technicals. Nonetheless, there are certain levels within the EUR/CHF breakout that is important. EUR/CHF needs to be trading above the December 2nd 1.2047 high to have any chance of extending its gains without intervention. If it drops back towards 1.2020, the 1.20 peg could be tested once again but we do not expect EUR/CHF to drop below 1.1990.

Time is Money

Boris Schlossberg

Whenever traders look at the chart they are always studying either price or some indicator value while ignoring what is in fact the most predictable variable of all -- time. As FX traders we are so conditioned to focus on price that we simply view time as background noise rather than as a critical component of daily movement.

On the most basic level time equals volatility. Almost everyone recognizes the fact that 90% of all price action occurs from 0400-2000 GMT when London and New York intersect -- and fully 65% of movement occurs in just four hours from 1100-1500 GMT when New York comes on line and European bourses close.

Isolating your day trading setups just to that time frame could radically improve your probability of success regardless of whether you trade momentum or mean reversion because the intensity of the moves are much greater, meaning your setups -- if they are accurate -- will stand a much better chance of making bigger money.

But time of day is just one of many ways that time influences trading in FX. Markets -- especially on a day trading level -- are a constant tug of war between long and shorts and understanding the inner workings of how supply and demand interact through time can provide you with better insight as to the near term direction of price.

Try our Trade Ideas for $1

The old adage that trading is timing is true on many levels and if you start paying more attention to time and less to price you may discover that Time is Money.